Alt-X Listings Boom Sustainable

When the JSE’s alternative exchange AltX opened in October 2003, one financial weekly greeted it with the headline “Doomed to Failure”, because with the lone exception of London’s AIM, small capitalisation boards around the world were not having much success.

After a slow start during which no company listed for three months, the exchange went on to secure 10 listings in 2004, seven in 2005, 23 in 2006 and 38 in 2007. With a smattering of delistings and moves to the main board, AltX recently breached the level of 74 listed companies. The buoyant activity in the construction industry is reflected in the fact that 12 of the recent listings were construction or related companies.

AltX aims to attract small and medium sized companies, and is also tailored more to the private investor than the institution, though institutions still account for 30% to 40% of market capitalisation.

It’s not often an individual can make a personal difference to the economy, but Noah Greenhill, manager of AltX and business development manager of the JSE, has done just that. Many analysts attribute the success of AltX to his personal dynamism and persistence – he in turn attributes it to the efforts of the business development team at the JSE.

Before joining the JSE, Greenhill was an entrepreneur developing a system to automate the trading of unlisted shares. When the joint venture fell through, the JSE expressed interest. It took three years of researching similar markets around the world before AltX became a reality.

According to research published by Ernst & Young, the volume of initial public offerings (IPOs) on the JSE surged 200% in the third quarter of 2007, buoyed by the construction sector boom. It has since accelerated.

Rules governing AltX firms are more robust than those in place during the dotcom boom in the 1990s, and some argue the risk on AltX is no greater than that of the JSE main board.

Nerina Visser, a quantitative strategist at Nedcor Securities, says the quality of companies listing on AltX today is superior to the last listings boom. Most of the companies listing are established and family-owned businesses, using the current favourable conditions to raise capital for expansion, or realise a stake in a family business.

“In contrast, many of the IPOs in the late 90s were new companies and ventures with no track record. At the same time, investors are undoubtedly more sophisticated than before and capable of doing their own research,” says Visser. She expects to see more notable success stories from the current listings than failures.

Stanlib analyst Anthony Sher agrees: “These are high quality companies with balance sheets mostly superior to what we saw in the late 90s. They are not as geared, and interest rates are not as high.”

The primary reason for the difference in quality, he says, is the robustness of the listing process applied by the AltX listings committee. The entry criteria are significantly higher than a few years ago, says Sher.

He believes the greatest investment opportunity for private investors is the construction and infrastructure sector of AltX. Companies such as Esor, WG Wearne and Robex are particular success stories, with WG Wearne being a 100-year old firm. The market cap of some AltX companies has grown dramatically since listing.

“It is very satisfying to see companies like Africa Dawn growing from R8 million capitalisation to R500 million in just over two years. It is satisfying to make a difference – what we’re doing at AltX is making millionaires and creating jobs in South Africa,” says Greenhill.

His vision for the exchange is that it ultimately becomes home to more companies than the main board. “This would reflect the economy, where there are more SMBs than large companies. It is attainable.”

Before becoming a financial writer and freelance journalist in 1997, Eamonn Ryan was a legal adviser, company secretary and alternate director at listed company Cashbuild Limited from 1988 to 1997. Since becoming a financial writer, he has focused on the business and financial sectors, as well as personal finance, writing for Finweek, The Star Business Report, Sunday Times Business Times, Business Day, Mail & Guardian, Entrepreneur, Corporate Research Foundation (which brings out a series of books each year ranking SA’s best employers and best managers), as well as a host of once-off and annual publications such as ‘Enterprising Women’ and ‘Portfolio of Black Business’. He also writes media releases, inhouse magazines and sustainability or annual financial reports for various South African corporates and financial services groups, including the Ernst & Young annual M&A book.

(Infographic) The 10 Things You Should Cover In Every Investment Pitch

If you’ve ever watched Entrepreneur’s original series, Elevator Pitch, then you’ve probably seen smart founders make dumb mistakes while pitching their ideas to potential investors. They might flub an answer or get tongue-tied, or they might just be a little boring. Other times, you might notice that something seemed off about a pitch, but you can’t quite put your finger on why.

Investors are gambling every time they put money into a new project or idea. Your job when pitching is to prove to them that you’re worth the risk. That means you’ll need to not only show them the possible upside of what they have to gain, but also be clear about what they could possibly expect to lose and their odds. In other words, you need to give them a holistic view of what you do, not just the one good idea.

You might have pitched an investor yourself and thought you crushed it, only to hear that the investor isn’t interested. If that’s the case, there’s a chance the pitch was missing one of 10 essential elements.

This infographic by Buffalo 7breaks down 10 slides you should have in your next investment pitch deck. If you’re not presenting formally, though, you can still keep track of these aspects in your head and make sure you cover each one. They include:

The vision, where you concisely explain your idea.

The problem. Why is your vision necessary or helpful?

The opportunity. What is the market size, and how can you position yourself to earn a share of it?

‘Shark Tank’ Investors Reveal Top 5 Tips To Make Your Business Famous

Shark Tank enters its tenth season as popular as ever. Over the past decade, millions of people have watched fascinated as entrepreneurs pitched their business ideas and startups in the hopes of winning an investment and support from self-made millionaires and billionaires.

The multi-Emmy® Award-winning reality-based show has had a tremendous impact on the business world and has been a major influence on the increased popularity of becoming an entrepreneur. Over the years, the show has evolved into one of the world’s top platforms to launch a business and recently reached an astonishing $100 million in deals offered in the Tank.

I was recently invited to attend a private event hosted on the set of Shark Tank to celebrate their 10th season and met with all the Sharks and most of the guest Sharks for the current season. This year’s guest list includes luminaries:

Charles Barkley, Hall of Fame NBA star and TV analyst

Alex Rodriguez, legendary baseball player and businessman

Rohan Oza, an iconic brand builder and marketing expert

Sara Blakely, founder and owner of SPANX brand

Matt Higgins, the co-founder and CEO of RSE Ventures and vice chairman of the Miami Dolphins

Jamie Siminoff, the CEO of RING, who rejected an investment offer in season 5, but went on to sell his company to Amazon for a whopping $1 billion.

My better half was also invited, and we arrived promptly on time at Studio 24 inside of Sony Pictures Studios in Culver City, CA. We were greeted by the cordial staff who informed us that the Sharks were still filming the last takes of the day. After several minutes, we were invited to chat with the Sharks on the main floor where nervous entrepreneurs excitedly pitch their companies to the investors under the bright lights of the studio set.

I was curious to know what excited the Sharks the most about their tenth season and what they believed to be the best advice for an entrepreneur to help make their business famous.

1. Create an ingenious product

When asked, Lori Greiner said, “It’s a mix, right? Of smart marketing and ingenious product. For example, Scrub Daddy was a technology. So, taking that one sponge, which was revolutionary, changed the whole sponge arena. We now have, to date, 20 different SKUs, and we have 30,000 new retail locations and 170 million in sales. That’s what takes it from one idea to a global brand.”

Of course, skillfully promoting your product on a platform like QVC is another excellent way to make your business famous. The day after the Scrub Daddy episode aired, Greiner helped CEO Aaron Krause sell their entire inventory of 42,000 sponges in less than seven minutes on QVC.

2. Leverage social media marketing

During my chat with Bethenny Frankel, she stressed, “Social networking is so important. Also being a little bit disruptive now … and you have to be creative. You have to be creative. The President was the most disruptive candidate that there’s probably ever been in history. He got people’s attention, and young entrepreneurs need to get people’s attention in some way. So be a little disruptive.”

Matt Higgins responded, “I’d say that you have to understand social and digital marketing. You can’t survive unless you understand Instagram, Snapchat or all the tools out there. You have to be contemporary.”

Barbara Corcoran claimed, “Every one of us successful entrepreneurs, for the last two years, were phenomenal at social media. It’s true. No exceptions.”

No smart entrepreneur will deny the power of social media when it comes to making your company famous. With more than 2 billion people worldwide using some form of social media, any business can put their business in front of a large audience, especially if they can create content that goes viral.

3. Build a community

Daymond John stressed the value of building a community. “You’ve got to build a community,” stated John. “Nobody needs to buy anything new in this world. They only buy it because there’s some form of community and/or need that you are supplying for them.”

John speaks from experience. He built a successful clothing empire by creating a vast community of his own via his clothing brand FUBU. John wisely invested in celebrity endorsements, making him an early pioneer of modern influencer marketing.

If you lack the resources to build your own community from scratch, you can leverage the power of others. Partnering with influencers who have cultivated their own communities allows you to introduce your product or service to larger audiences. In fact, some consider Shark Tank to be the world’s largest business influencer platform.

4. Devise a publicity hook to win earned media coverage

Barbara Corcoran also said, “I’d say you need a publicity hook. Some hook, angle or gimmick that grabs the attention unfairly from your competitors.”

Remember, Shark Tank is a unique combination of reality television, business acumen, and entertainment. Doing something unique, different, or disruptive can get you significant media attention and abundant free publicity… especially if you’re able to leverage that publicity and captivate the show’s producers, who decide your fate as to whether you’ll appear on the show.

Regardless if you want to appear on Shark Tank or not, being featured in the media is a way to differentiate your business from the competition and reach a broader audience. Be creative and willing to take educated risks when it comes to getting noticed by the media. You should always be actively building relationships with media representatives and ask for their insights when formulating your plan.

5. Know your strengths and stay focused

When I asked for billionaire Mark Cuban’s insights, he thoughtfully replied, “Knowing your unique advantages, play to that, and your strengths. And focus. You know, what happens is very often people start with an idea, get a little bit of traction, then it gets hard. And when it gets hard, they start looking for other things to do as opposed to playing to their strengths. Because businesses aren’t supposed to be easy. You know, if they were easy everybody would already be rich, and we’d all be sitting on a beach somewhere. And so, when it gets tough, you gotta dig in and work hard. I’d say the final thing I’d add is that sales cures all. There’s never been a business that succeeded without sales. So, if you focus on selling … if you’re able to sell … and that’s something that is one of your core competencies, then you’ll be okay.”

The Best Way To Get Your Teenager To Start Investing Right Now

In this video, Entrepreneur Network partner Jeff Rose talks about receiving a letter from a young investor, who is looking for advice on how to begin investing.

Rose talks about the act of actually doing the investing versus worrying about reading books or asking others about the process. Taking action gets the most results, since you are able to make mistakes and start the learning process. Taking action also leads to more experience, which is to say if you begin investing as a teen, you will be much more savvy about investing as a twenty-something.

In answering this young investor’s concern about investment direction – the fan hopes to balance short-term gain and long-term gain, as well as to establish some padding for a future business – Rose turns him in one specific direction: A Roth IRA. When he was younger, Rose didn’t even know what a stock was until far into his college years; during this time, he discovered the Roth IRA and learned of its compounding power, as well as the accessibility of an initial investment.

As another route, Rose also mentions starting a business. This path, Rose explains, will help you achieve the most return on investment.